If you’re considering solar panel installation but don’t know how to pay for it, you’ve got to read this post. We’ve teamed up with Ecotality.com, which specializes in “everything solar,” to help you figure out how to pay for the clean energy you want, starting with solar panel installation. Read on!
The number of homeowners considering having solar panels installed on their homes is growing. People love the idea of using clean, non-polluting energy that doesn’t cause climate change or air pollution. They’d like to lower their utility bills, too. No wonder 70% of Americans say they “support a version of California’s rooftop solar policy being mandated nationwide.”
Yet, if solar is so popular, why isn’t there more of it? One big reason is that many homeowners think they can’t afford it. We wanted to provide some perspective on the costs and suggestions for how to cover them.
What Could Solar Panels Cost?
There are four elemental aspects when installing solar: solar panels, an inverter to convert solar electricity to current you can use in your home, a controller to manage the system, and batteries to store generated power.
Costs for each of these can differ depending on where you live, what finance options you consider and are qualified for, and how much electricity your home both uses and could produce via the installed solar panels.
Generally, total costs could start at $20,000 and more, depending on how many panels you install. However, before you run for the hills, keep in mind that this is just the “sticker price,” not necessarily the final price you’ll pay.
Once you factor in statewide energy tax credits, company discounts, zero-down financing, and federal tax cuts, you might actually pay for only half that cost. And once the system is installed, your lower or zero utility bills additionally offset the initial cost of your system, which might eventually cost you nothing over time.
For example, say your electricity bill averages $200 a month, or $2400 a year.
Your solar panel installation might cost $20,000 at the sticker price, but various incentives and tax credits mean the actual cost outlay is $10,000.
After a year, your utility bills are zero, which means you’re saving $2400 a year.
In less than 5 years, you’ve paid for your solar panel installation through money you’re NOT paying to your utility. Thereafter, you’re “making” $2400 a year on your system by relying on your own solar rather than power from the utility.
Here’s another way to think of it.
You were already spending $2400 a year on electricity. You shifted that money into payments for solar panels. After 5 years, you paid for your solar system. If you live in your home another 10 years, you’ll actually pocket almost $25,000 in money saved on electricity.
By the way, many states allow solarized homes to sell money back to their utility. Not only can your home’s solar system save you money, but it might make you a little, too.
Available Loans for Solar Panel Installations
One solar panel financing option is solar loans.
Solar financing companies include: Urban Solar Group, Florida Solar Design Group, Sun-Tec, Fun In The Sun Solar, and ESD Solar. Know that obtaining multiple quotes can help you better decide which package best suits your budget. (You can choose to finance the complete cost of your solar infrastructure by using a property as collateral, should a financial company require that from you.)
Why Solar Loans Could Work For You
You will need to decide if you should purchase your panels outright or take out a loan to finance their purchase (some companies also install panels for free, but then charge you for the electricity generated, like a standard utility does – see below). Ecotality believes loans make sense if the monthly savings you get from lower electric bills are higher than the amount of the loan you need to repay monthly.
Typically, solar loans have very similar terms and conditions as other home improvement loans. A few States even extend below-market interest rates that are paired with subsidized solar loans. Additionally, many secured solar loans have a tax-deductible interest, so this also already lets you save more on income taxes.
Solar Leases and Power Purchase Agreements
Solar leases and power purchase agreements (PPAs) allow you to rent a solar panel system without having to purchase it.
With a PPA or lease, it is the third-party owner’s (TPO) responsibility to set up the solar panels on your home. You will pay a below-market rate as payment for the solar electricity for the entire duration of the term. So, instead of paying your utility for electricity it generates from polluting coal and oil, you’ll pay a solar provider for solar power. You still turn the lights on, but the power source is cleaner!
Under this arrangement, you won’t need to worry about having to pay a hefty upfront figure.
However, you will not be eligible for all the tax credits, rebates, and other government incentives available to solar panel owners. These perks go to your TPO. Furthermore, at the end of the lease, TPOs may either remove them from your property or sell them to you. They will also be responsible for taking care of all the solar panel maintenance fees, should there be any.
Compare Your Solar Financing Options
Before you decide to take on a financial product, examine every solar financing option you’re qualified for, including PPAs and solar leases. Discuss your choices with a financial advisor to tax consultant. Be cautious as you weigh the pros and cons of your options. Look for sites online that discuss solar panel installation costs and present side-by-side computations and comparisons of packages provided by solar providers.
Benefits of Installing Solar Panels
Environment-Friendly – Compared to other available energy sources, solar energy is among the cleanest. It doesn’t pollute the water, nor does it produce greenhouse gases or nuclear waste. It also doesn’t produce noise, ensuring households aren’t bothered by unwarranted buzzing sounds.
Lower Utility Bills – Using your own electricity translates to not needing as much from your usual electricity utility. This automatically means you get to cut back on the amount of money you would have spent on your electricity bills. It also helps that it’s possible to sell unused electricity back to the grid.
Solar Energy Can Be Used In More Places Than You Think – Really shady roofs? No. But as long as sunshine is penetrative, solar energy can be put to use. For example, you can install solar panels on sunny property near your home, like in your backyard. Panels don’t need to go on your roof to provide electricity to your home.
Ecotality offers many more in-depth explanations of how solar works. They also provide excellent product review buying guides and list solar companies to check out state-by-state.
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